Trailing drawdown is a dynamic risk management metric used by YRM Prop to protect trading capital while allowing for account growth. Unlike fixed drawdowns that remain static, trailing drawdown adjusts based on your highest account balance, creating a "floating" limit that moves upward as your account grows.
How Trailing Drawdown Works in Instant Prime
Each Instant Prime account has a specific trailing drawdown amount:
$25K account: $1,250 trailing drawdown
$50K account: $2,000 trailing drawdown
$100K account: $4,000 trailing drawdown
$150K account: $6,000 trailing drawdown
This amount is initially calculated from your starting balance. As your account value increases, the drawdown threshold adjusts upward to protect your growing equity.
The Trailing Mechanism Explained
The trailing mechanism works by:
Monitoring your highest achieved account balance
Setting your drawdown limit relative to that high-water mark
Moving the limit upward as new highs are achieved
Never moving the limit downward, even if your account value falls
Examples with Different Account Sizes
Example 1: $50K Instant Prime Account
Starting balance: $50,000
Trailing drawdown: $2,000
Initial drawdown limit: $48,000 ($50,000 - $2,000)
Scenario A: Account Growth
Day 1: Account grows to $51,500
New drawdown limit: $49,500 ($51,500 - $2,000)
Day 2: Account grows to $53,000
New drawdown limit: $51,000 ($53,000 - $2,000)
If your account subsequently falls to $51,200, you remain within your drawdown limit. The limit does not move downward with account value decreases.
Scenario B: Account Decline
Starting at $53,000 with limit at $51,000
Day 3: Account falls to $50,800
You're still within limits ($50,800 > $51,000)
Day 4: Account falls further to $50,600
You're now in violation ($50,600 < $51,000)
Result: Account flags for soft breach
Example 2: $100K Instant Prime Account
Starting balance: $100,000
Trailing drawdown: $4,000
Initial drawdown limit: $96,000
Growth and Recovery Scenario
Account grows to $110,000
New drawdown limit: $106,000 ($110,000 - $4,000)
Account drops to $107,000 (still safe)
Account drops to $105,500 (soft breach)
End-of-Day Evaluation
For Instant Prime accounts, trailing drawdown is evaluated at the end of each trading day (4:00 PM ET/market close). This means:
Intraday fluctuations below your drawdown limit are permitted
Only your account value at market close is used for drawdown evaluation
You can temporarily exceed drawdown limits during the day if you recover by market close
Managing Trailing Drawdown Effectively
To successfully manage your account's trailing drawdown:
Monitor your high-water mark: Always know your account's highest value and calculate your current drawdown limit
Adjust position sizes: As your account grows, consider reducing position sizes to protect your new high-water mark
Take strategic profits: Consider securing profits to stabilize your account value below significant new highs
Use daily accounting: Track your end-of-day balances to understand your exact drawdown limit
Understanding and respecting the trailing drawdown mechanism is crucial for long-term success with your Instant Prime account and progression toward live trading opportunities with YRM Prop.